AutoInsurance.com
Published: October 5, 2022Last updated: November 3, 2022

Do You Need to Insure a Self-Driving Car?

If your autonomous vehicle causes an accident, will you be held responsible?

It’s the future. You’re sitting in a self-driving car, texting on your phone, bopping to the music, and looking out the window dreamily. But wait, what was that noise? Whoops — your self-driving car just bumped into the vehicle in front of you. The driver is getting out, and boy, does he look angry.

Self-driving cars, also known as autonomous cars, aren’t widely available in the U.S. yet, but some autonomous features are in cars already, like cruise control. As we look to the future of driving, it begs a couple questions: If a self-driving car causes an accident, who is responsible? And how will autonomous cars affect the insurance industry as we know it?

Do You Need to Insure a Self-Driving Car?

You’ll still need auto insurance for self-driving cars, including liability coverage, collision coverage, and comprehensive coverage. But since self-driving cars have fewer accidents than human-driven cars (sorry, humans!), insurance might be cheaper for autonomous vehicles.

CheckFYI

The cause of most car accidents is human error, like driving under the influence, driving while distracted, and driving aggressively. Other crash causes include inclement weather, road hazards, and auto defects1.

How Autonomous Cars Affect Insurance

Insurance Rates

Although repair costs for self-driving cars could be higher, causing auto insurance costs to rise, the lower accident rate for autonomous vehicles will offset this price increase.

Liability

Liability is another word for “fault” — determining which party caused a car accident. In terms of car insurance, bodily injury and property damage coverage from liability insurance pay for the other party’s property damages and injuries if you caused an accident. But what happens when your car is driving itself? Would you as the passenger still be held responsible for the car’s sins?

At this point, it’s unclear how autonomous cars will influence fault and claims. However, most likely, it won’t be the passenger who is found liable. Instead, companies may hold car manufacturers, software developers, or sensor vendors responsible for a car’s mistakes.

Underwriting

Currently, insurance companies consider a variety of factors to determine car insurance rates, including the driver’s:

  • Driving history, including accidents, DUIs, and traffic violations
  • Credit score, which correlates with the likelihood of filing claims (people with bad credit are statistically more likely to file claims)
  • Age (younger drivers with less experience are more likely to get into accidents)

However, with autonomous driving, someone’s driving record, be it bad or good, won’t affect the cost of insurance, nor will their credit score or age. Instead, there will be more of a focus on the car itself, including its make, model, model year, and safety features.

Light BulbNOTE

Massachusetts, Michigan, California, and Hawaii are the only states in which car insurance companies can’t use people’s credit scores to determine insurance premiums.

Ownership

Some experts believe that if all vehicles are self-driving in the future, individuals won’t own cars anymore. Rather, vehicles will instead belong to a company, city, or organization that lets people call for a car ride from their phones, much like Uber. Once called, the car will drive itself from a central location to someone’s house to pick them up2. Then it would be the responsibility of that organization to insure the car.

Defining Self-Driving Cars

While the term “self-driving car” might be self-explanatory, there are different levels of autonomous vehicles.

Level Automation Definition Level of human driver involvement Examples of driving technology
0 Momentary Warnings and alerts that intervene on safety issues Completely responsible for driving car Automatic emergency braking, lane departure warning, forward collision warning
1 Driver assistance Help with steering or acceleration/braking Responsible for either steering or acceleration/braking Adaptive cruise control, lane keeping assistance
2 Partial/additional Continuous assistance with steering, acceleration, and braking Responsible for driving, but not steering, acceleration, or braking Highway pilot
3 Conditional Driving tasks Must be available to take over if needed Not available in vehicles in the U.S.
4 High All driving tasks within limited service areas None Not available in vehicles in the U.S.
5 Full All driving on all roadways and under all conditions, while passengers aren’t engaged None Not available in vehicles in the U.S.3

How Soon Will We Have Self-Driving Cars?

Even conditionally autonomous vehicles are still a ways away from the mainstream. And according to the National Highway Traffic Safety Administration, we won’t have fully autonomous vehicles until 2025 at the earliest. On the other hand, Elon Musk, CEO of Tesla, says we will have self-driving cars around May 2023. But don’t get too excited. He’s been saying that we’ll have self-driving cars within the year since 20204.

Citations

  1. Causes of Car Accidents. Justia. (2021, Oct).
    https://www.justia.com/car-accidents/causes-of-car-accidents/

  2. Background on: Self-driving cars and insurance. III. (2022, Aug).
    https://www.iii.org/article/background-on-self-driving-cars-and-insurance

  3. Automated Vehicles for Safety. NHTSA. (2022).
    https://www.nhtsa.gov/technology-innovation/automated-vehicles-safety

  4. Elon Musk says Tesla will have self-driving cars without the need for human drivers this time next year. Electreck. (2022, May). https://electrek.co/2022/05/22/elon-musk-tesla-self-driving-cars-without-human-driver-next-year/#:~:text=Musk%20said%20that%20Tesla%20will,%E2%80%93%20therefore%2C%20around%20May%202023